Mining: Do you mind?

If John Key wants us to be as rich as the Australians, why not start acting like them? Time to adopt the win-at-all-costs attitude, start bowling underarm and of course, mine every hill. The mining sector cosseted the Australian economy during the recent global financial crisis, and has yanked up the Australian dollar to parity with the US dollar. It is even attracting white-collar workers from their cosy Sydney offices to drive trucks across the arid Aussie interior. While the Chinese are taking their time developing a taste for our dairy products and red meat, they can’t get enough of those Aussie minerals.

Is mining bad? No, not unless we want to shun our modern lifestyles entirely and live in tree-huts in the Coromandel (apologies to all those that actually want to live in tree-huts in the Coromandel). It makes no sense to write off the possibility of mining any part of New Zealand simply because we are opposed in principle. Some other part of the world is going to get mined to provide those raw materials regardless. So the damage is going to happen, the question is should we let it happen here and under what circumstances?

There are a number of important issues to consider in making a decision. Think of the minerals, the land and the trees on it as a natural asset, and mining is like selling that asset off. Is now the right time to mine or should we wait in case the minerals are worth more in the future? Will we use the funds from the loss of our natural assets to buy other assets or fritter the money away? Could we even keep our total level of natural assets the same, as well as reaping the economic benefits of mining?

Take an extreme example. Let’s say your Coromandel bach sat on top of a big hunk of gold. Sure the location is perfect, the beach is nice and only a few minutes’ walk away. But I bet you would quite happily sell it off to the miners at the right price, and you’d probably throw in your grandmother for good measure. You’d probably use the money to buy another bach somewhere just as nice, and pocket the difference as a retirement fund.

There is no discernible difference at a national level – this mining proposal should surely be built on the same logic. There is nothing wrong with running down one asset as long as you keep your total assets the same. So the Government should be able to demonstrate that the nation will have at least the same amount of assets as a result of this mining.

The Ministry of Economic Development and Department of Conservation have tried to do this, but unfortunately the proposed approach is rather tokenistic. A number of existing reserves will be upgraded to Section 4status to compensate for the loss of the mined land. The trouble is that it is not clear what difference will be made to those areas upgraded to Section 4, other than an assurance that mining will not happen there in the future (unless it does). On the other hand, it is only too clear what difference will be made to those areas mined.

This illustrates a bigger issue – how does one measure the value of our natural assets in the conservation estate? The approach in the Government’s conservation document focuses mostly on land area. But the ecological value of two pieces of land could be vastly different. What we really want from our conservation estate is ecological services – which can range from tourism, the protection of biodiversity down to the mucky business of the recycling of nutrients. There is little sign that this amount of thought has gone into the Government’s proposed mining package.

One aspect of the Government’s package provides a glimmer of hope – half of the mining royalties will go into a Conservation fund. This is a neat idea, although it is lacking in detail. We are told there will be criteria that will "maximize the conservation benefits" and a decision making process "involving conservation experts". A more convincing approach would be to set out now the assets that the Government will purchase with the mining royalties. Conservation experts could recommend new, ecologically important areas that could be added to the conservation estate. This would give the New Zealand public some assurances that our level of assets, particularly natural assets, are not being flogged off for short term gain.

It is time to move beyond the knee jerk reactions of both developers and environmentalists. If this mining is really worth doing it should be possible for both sides to work together to develop a package of proposals that benefit New Zealand both economically and environmentally.

Enjoyed this article?

You might like to subscribe to our newsletter and receive the latest news from Infometrics in your inbox. It’s free and we won’t ever spam you.